1983 Payment-in-Kind Program Overview:

Its Design, Impact, and Cost

RCED-85-89: Published: Sep 25, 1985. Publicly Released: Sep 25, 1985.

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GAO reviewed the Department of Agriculture's (USDA) 1983 Payment-In-Kind (PIK) program to determine the: (1) design and justification of key 1983 PIK program provisions; (2) program's impact and cost; (3) distribution of payments to farmers; and (4) effectiveness of the acquisition and delivery of commodities to farmers.

GAO found that: (1) the USDA determination that the $50,000 payment limitation per farmer did not apply to PIK commodity payments was incorrect and inconsistent with applicable statutory requirements; (2) USDA did not establish specific, quantified goals for the program; (3) the program reduced production and surplus stock levels and increased farmers' net cash incomes; (4) 15.75 million acres of cropland were taken out of production as a result of PIK; and (5) the 1983 farm programs reduced production of five PIK commodities by about 18 percent, reduced government and private stock levels by about 35 percent, and increased farmers' net cash incomes by about $9 billion. The PIK program cost the government between $9.8 and $10.9 billion, which represents the cost of storage compensation and diversion payments made to farmers, distribution costs for the commodities, and the potential lost interest payments on loans made to farmers that participated in the PIK program.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: This recommendation should be closed.

    Recommendation: To better evaluate the results of production control programs, the Secretary of Agriculture should require the Administrator of the Agricultural Stabilization and Conservation Service to establish quantified goals specifying what these future programs are to accomplish each year. This will facilitate better evaluations of program results as well as determinations about overall program effectiveness by providing criteria by which a program's effectiveness can be measured against its costs.

    Agency Affected: Department of Agriculture

 

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